Selling an apartment building Taxes

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Sell an apartment building – Control – Do you want to sell your apartment building? This not only involves the usual costs for control, notary and land registry office, but also some control payments. Find out here which controls you have to consider when selling your apartment building. Additionally: How you can save on controls and what matters when selling an inherited apartment building. Questions? Write to me or call, completely non-committal: Contact us.

Key Facts -

Control when selling an apartment building

Which taxes apply when selling an apartment building?

Speculation tax on an apartment building

Calculation of the capital gain

Commercial Tax: When Does It Apply?

Asset Deal vs. Share Deal in the Sale of MFHs

Saving taxes: Strategies for MFH sellers

MFH Inheritance: Taxes when selling an inherited apartment building

Control when selling an apartment building

Which taxes apply when selling an apartment building?

Selling an apartment building can be associated with significant tax payments. At a glance:

Tax type	Due	Amount	Avoidable?
Speculation tax	When selling within 10 years	Personal income tax rate (up to 45%)	Yes, after 10 years
Trade tax	Commercial real estate trading	15–17% + municipal surcharge	Yes, with the right structure
Value added tax	Only if VAT option is chosen	19%	Yes, standard case tax-free
Corporate tax	When selling through a GmbH	15% + solidarity surcharge	–

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Speculation tax on an apartment building

Also for multi-family homes, the 10-year speculation period (§ 23 EStG) applies. The period begins with the notarized purchase contract. Decisive:

After 10 years: Capital gain from sale fully tax-free (private individual)
Under 10 years: The prize is taxed at the personal income tax rate
Self-Occupancy: For MFH, the 3-year self-occupancy rule applies only to the unit occupied by the owner, not to the entire building.
Exemption: 600 € per year (§ 23 Abs. 3 EStG) – usually not relevant for MFH sales

Calculation of the capital gain

Formel: Selling price − purchase costs − additional costs − depreciation (depreciation Real Estate Depreciation: Depreciation & Rates) + taxable depreciation amounts

Important: Depreciation already deducted (AfA) is added back to the taxable profit upon sale (AfA recalculation). This significantly increases the effective tax burden.

Commercial Tax: When Does It Apply?

Private individuals who hold real estate as an investment generally pay no commercial tax. The situation becomes risky with the so-called Three-Property Threshold:

Anyone who buys and sells more than three properties within five years is considered a commercial real estate dealer
Consequence: All profits – even retroactively – become subject to commercial tax
Commercial tax: approximately 15 % corporate tax + local surcharge (effectively 30–40 %)
The 10-year speculation exemption is lost in commercial trading!

Solution: Hold each property for longer than five years or structure ownership through separate GmbHs/holding structures.

Asset Deal vs. Share Deal in the Sale of MFHs

When selling larger multi-family homes owned by a company, there are two sale structures:

	Asset Deal	Share Deal
What is being sold?	The plot/building itself	Shares in the GmbH/KG that holds the MFH
Purchase tax buyer	Full 3.5–6.5 % applicable	For <90 % acquisition: waived (structuring model)
Tax seller	Corporate tax on profit (15 % + solidarity surcharge)	Partial income procedure (60 % taxable)
Buyer preference	Possible to increase depreciation	Saving on purchase tax
Risk	Higher transaction costs	Liability for old debts

Saving taxes: Strategies for MFH sellers

Wait 10 years: For privately held MFH the simplest way to achieve tax exemption
Sell in a bad income year: For example, after retirement or in a loss year
Offset losses: Losses from other property sales in the same year reduce the profit
Transfer to children before sale: Gift to children in a lower tax class (observe holding periods!)
Limited liability company structure: MFHs sold within the GmbH structure are subject to only 1.5 % effective tax when retained (§ 8b KStG) — complex structure, tax advisor necessary
1031-Exchange Analogue (DE: Reinvestment): No direct equivalent, but tax advisors can delay the tax burden through clever reinvestment planning

MFH Inheritance: Taxes when selling an inherited apartment building

If an apartment building is inherited and then sold, special rules apply:

The speculation period starts from the deceased’s purchase date – not from the inheritance
If the deceased bought the MFH more than 10 years ago: Sale after inheritance is tax-free
If the deceased lived in the MFH themselves (only one unit): The 3-year rule applies to this unit
Inheritance tax and speculation tax can apply simultaneously – independent of each other
Exemptions for inheritance tax: 400,000 € (children), 500,000 € (spouse)

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